Legislature In New Jersey Cuts Sales Tax

By WAYNE KING,

Published: April 3, 1992

TRENTON, April 2—
The Senate gave final legislative approval today to a one-cent rollback in the state sales tax, but Gov. Jim Florio said he wanted to see how the Republicans who control the Legislature would make up the $608 million in lost revenues before he approved or rejected the measure. If he decides to veto it, he faces an almost certain override.

"I'd love to sign a sales tax rollback," said the Governor, a Democrat, "but I need to know whether it is a good deal for New Jersey's citizens."

The Governor's definition of a "good deal" is a tax reduction that will not require higher property taxes, college tuition or transit fares or significantly lower state aid to education.

The Senate approved the tax rollback, from 7 to 6 percent, by a vote of 28 to 1. The rollback would take effect July 1.

One Democratic Senator, Raymond J. Zane of Woodbury, voted with the 27 Republicans and the remaining Democrats abstained or were absent.

The measure passed the Assembly last week by an even larger margin, 59 to 5. Two Democrats joined the Republicans and the rest were absent or abstained on the ground that they could not vote on a rollback without knowing what programs or services would be cut to make up the lost revenue. A Buoyant Atmosphere

The vote in both houses was sufficient to override a veto by the Governor.

The rollback was a Republican pledge since the party won overwhelming control of the Legislature last Nov. 5 on a tidal wave of voter anger over a $2.8 billion tax increase imposed by Governor Florio and the Democratically controlled Legislature in 1990.

With the outcome a foregone conclusion, the Senate debate was essentially a reprise of last week's discussion in the Assembly, and, though pointed, took place in an almost buoyant atmosphere. Both sides wore lapel pins, the Democrats' asking "Who Gets Cut?" and the Republicans' saying "Jobs Now!" referring to their program to revitalize the economy, which includes the tax cut.

On the floor, Democrats argued that they were being asked to vote in the dark and Republicans maintained that they would explain their proposed cuts in early May. The Republicans insisted that their spending reductions would total more than the $608 million needed to replace the revenue that would be lost through the sales tax rollback.

The Republican Senate President, Donald T. DiFrancesco, in fact ruled that debate over the revenue shortfall was not pertinent and that only the rollback itself could be discussed.

"It may be legitimate to ask questions," about revenues, he said, "but it does not have anything to do with the bill, which is to reduce the sales tax. The debate is not over revenues."

Senator Walter Rand of Camden, a Democrat, retorted, "It's a sham and a shame, irresponsible at best, to move this legislation without identifying the cuts. If you think you can hide behind parliamentary camouflage, you are mistaken."

Beyond saying that the necessary cuts will be forthcoming, Republicans have generally said only that the sales-tax reduction itself will spur spending that will generate more sales-tax revenue, an analysis that Governor Florio described as "discredited supply-side voodoo economics."

The tax cut would translate to about $77 over a year for each New Jersey citizen, although some analysts say that the figure would be closer to about $47 for an individual because corporations account for an estimated 40 percent of the spending that generates sales taxes. Renters May Lose Out

One Republican Senator, Dick LaRossa of Trenton, suggested in floor debate that $330 million of the shortfall could be made up by reducing the amounts returned to taxpayers under the Governor's expanded Homestead Tax Rebate program, which took effect last year.

Governor Florio and the Democrats increased the rebate from a flat $180 for each homeowner to a sliding scale that, on the basis of income and property tax paid, can go as high as $500 and includes renters for the first time.

Mr. LaRossa alluded to the inclusion of renters as a possible source of cuts. "I'm certainly not interested in redistributing tax dollars to people who have never paid a dime in property taxes," he said.

The Senate's approval of the rollback left Governor Florio with four options. He can sign the bill, veto it outright, veto it with conditions or allow it to become law without his signature after 45 days. If he vetoes it, he faces a virtually certain override, since the Republicans control two-thirds majorities in both houses.

Today, he gave no strong indication of his intentions, except to say that no decision is likely until he knows where the cuts will be made, and he may take all of the 45 days he is allowed under the law to make up his mind.

"If we can cut the sales tax by a penny, or two pennies for that matter, we should do it," he said in a written statement issued after the vote. "I will be listening to and consulting with the people of New Jersey during the 45 days I have to study this legislation" to "make sure this would be a good deal."

Elderly people, he said, "have told me it wouldn't be a good deal if it means losing their homes because the scandalous property tax increases of the 1980's return."

He also said he opposed a rollback if it caused substantial tuition increases at state colleges and universities or fare increases because of reduced subsidies to N.J. Transit.